#425. What Excites Us About the Future for Agracel – Part II (Macro Trends for the Future)

WHAT EXCITES US ABOUT THE FUTURE FOR AGRACEL – Part II
Macro Trends for the Future

Last week we began a series on a number of very positive trends that will greatly impact Agracel for years if not decades into the future. These trends can be broken down into six broad ones:

1. Oil & gas independence (378, 379, 391, 392, 397, 398)
2. Reshoring USA manufacturing (415, 375)
3. USA auto industry growth (368, 380)
4. Right to Work & American productivity
5. USA demographics
6. The return of inflation

Over the past couple of years, we have talked extensively about the first three trends listed above. (Click on the link behind the trend above for past Agurban on that topic.) Last week, we shared our view on Right to Work and American Productivity. This week we will touch on USA Demographics, and then finish out our series next week with The Return of Inflation.

USA Demographics

While governments can greatly impact the productivity and profitability of business with their policies, there is not as much they can do about the demographics of their citizens. China however, dramatically impacted their growth trajectory with their one-child policy first introduced in 1978. After that year, there were very serious restrictions put upon families to limit them to only having one child.

While the impact was slow to show much of an impact, it is starting to have very big ramifications as the average age in China is quickly increasing when compared to other developing countries. Young people entering the workforce today are likely to have only two parents and two sets of grandparents, all of whom are likely to have funneled all of their support toward this one child. As a result these young people have been coddled and spoiled since birth. But, as everyone ages it will place the burden for the care of those older relatives squarely upon the shoulders of that one person and create much greater long term issues for China.

This policy in China is resulting in its workforce to begin to shrink in size within the next five years. China will quickly follow countries like Japan, Germany and Russia which have already gone over that threshold. Others will follow, but predictions are that the USA is at least 100 years away from hitting that tipping point.

By 2030 the median age in the USA will only grow from the current 37 years of age to 39, but China’s will be 43; Russia 44; Germany 49 and Japan 52.

Next week we will finish our series with a discussion on inflation.